Payroll

HELP and HECS Repayment Rates 2025-26: What Australian Employers Need to Know

22 June 2026 · 9 min read

Quick Answer

For 2025-26, HELP repayment kicks in at $54,435 of repayment income, with rates running from 1% up to 10% for incomes above $159,664. Employers must withhold the additional HELP amount on top of regular PAYG withholding whenever an employee declares a study debt on their Tax File Number declaration. Failing to withhold correctly exposes you to ATO penalties.

If you employ anyone in Australia, there is a reasonable chance at least one of your workers has a HELP debt — the loan that funded their university or vocational education. What many small business owners do not realise is that managing HELP repayments is partly your job. The ATO requires you to withhold extra tax on top of the normal PAYG amount whenever an employee tells you they have a study debt.

The 2025-26 income year brought meaningful changes. The government lowered the minimum repayment threshold and adjusted the rate schedule, meaning more employees now trigger mandatory extra withholding — and the amounts have shifted. If your payroll software or manual calculations are still running on 2024-25 figures, you are almost certainly withholding the wrong amount right now.

With the 1 July 2026 Payday Super deadline just nine days away, this is exactly the wrong time to have unresolved payroll compliance gaps. Getting HELP withholding wrong sits alongside super non-payment as one of the ATO's key small business compliance targets. This guide gives you every threshold, every rate, and a clear explanation of what you must do in your payroll process.

What Is HELP Withholding and Why Are Employers Responsible?

HELP — Higher Education Loan Program — is the government scheme that lets Australians defer the cost of tertiary education. The debt does not accrue interest, but it is indexed annually to CPI, and it is repaid through the tax system once the borrower's income crosses the repayment threshold. The ATO does not chase employees directly through instalments; instead, it collects repayments via the PAYG withholding system — which means the employer does the heavy lifting.

When an employee hands you a Tax File Number (TFN) declaration or a Withholding declaration, they must tick the box that says they have a HELP, VSL, SSL, ABSTUDY SSL, or TSL debt. Once they tick that box, you are legally required to withhold an additional amount on top of their ordinary income tax withholding. The obligation sits with you under the Taxation Administration Act 1953 — not with your employee to manage separately.

The practical consequence is simple: your payroll calculation has two withholding components for study-debt employees — normal income tax and the HELP repayment component. Miss the second component and the employee ends up with a large tax bill at lodgement time. The ATO can also hold the employer liable for the under-withheld amount plus a penalty, so this is not a risk worth taking.

Rule: Under the Taxation Administration Act 1953, if an employee declares a study debt and you fail to withhold the correct additional amount, the ATO can recover the shortfall from the employer — not just the employee.

Key facts for employers:

Applies to HELP, VSL (VET Student Loans), SSL, ABSTUDY SSL, and TSL debts
Employee must declare the debt on their TFN declaration — verbal confirmation is not enough
Obligation is on the employer from the first pay period after the declaration is received
Withholding applies to all employment income, not just base salary

2025-26 HELP Repayment Thresholds and Rates

The ATO sets HELP repayment income thresholds and rates for each income year. For 2025-26, the minimum repayment income threshold is $54,435. This is the point at which repayment obligations begin. 'Repayment income' is not just salary — it includes taxable income plus any net investment losses, total net investment losses, and reportable fringe benefits, among other adjustments. For most employees, it effectively equals their total annual earnings.

Repayment rates increase incrementally across income bands. At the minimum threshold of $54,435, the repayment rate is 1% of repayment income. This climbs steadily: 2% at $62,945, 2.5% at $66,069, 3% at $72,166, 3.5% at $80,167, 4% at $86,652, 4.5% at $91,426, 5% at $100,900, 5.5% at $106,076, 6% at $115,003, 6.5% at $119,853, 7% at $127,217, 7.5% at $135,596, 8% at $140,974, 8.5% at $148,023, 9% at $155,424, 9.5% at $160,783, and 10% above $159,664 (the top band). These figures are sourced directly from the ATO's 2025-26 tax tables and study and training loan repayment calculator.

Why does the exact threshold matter for payroll? Because you withhold based on estimated annual income derived from the pay period. If you pay weekly, you multiply the gross weekly amount by 52 to estimate the annual income, find the applicable repayment rate in the table, then divide the annual repayment amount back down to a per-period figure. Getting this annualisation step wrong is the most common employer mistake.

Important: The repayment rate applies to the employee's entire repayment income, not just the slice above the threshold. An employee earning $60,000 does not repay 1% on just the $5,565 above the floor — they repay 1% on the full $60,000, which is $600 for the year.

2025-26 headline numbers:

$54,435 — minimum repayment income threshold (2025-26)
1% repayment rate at minimum threshold
10% repayment rate at the top band (above $159,664)
Rates apply to the full repayment income, not just the amount above the threshold
CPI indexation applied 1 June 2025 lifted outstanding HELP balances — repayment amounts adjusted accordingly

How to Calculate the Additional Withholding Amount Per Pay Period

The ATO provides two tools for this calculation: the Tax Withheld Calculator (available at ato.gov.au) and the downloadable NAT 1008 weekly/fortnightly/monthly tax tables for study and training support loans. For manual payroll, the process has three steps: annualise the employee's gross earnings for the pay period, identify which repayment income band they fall into, apply the corresponding rate to get the annual repayment amount, then convert that annual amount back to a per-period withholding figure.

For example: an employee on $1,300 per week earns an annualised income of $67,600. The applicable 2025-26 repayment rate for $67,600 is 2.5%, giving an annual HELP repayment of $1,690. Divided by 52 pay periods, you withhold an additional $32.50 per week on top of the ordinary income tax withholding for that salary level. This is the amount that gets remitted to the ATO alongside the rest of their PAYG withholding.

Payroll software should handle this automatically — but only if you have flagged the employee as having a study loan in the employee record. SAB Account AI applies the current ATO withholding tables and prompts you to record each employee's study loan status at onboarding, so the extra withholding is built into every payslip from day one. If you are running payroll manually or using a spreadsheet, use the ATO's Tax Withheld Calculator for every pay period rather than estimating.

ATO tool: The Tax Withheld Calculator at ato.gov.au/tax-withheld-calculator is the most reliable way to confirm the correct combined withholding amount for each pay period. It accounts for tax offsets, Medicare Levy, and study loan repayment in one figure.

Manual calculation steps:

Step 1: Annualise gross earnings (e.g. weekly pay × 52)
Step 2: Match annualised income to the 2025-26 HELP repayment rate table
Step 3: Multiply annualised income by the rate to get annual HELP repayment
Step 4: Divide annual repayment by pay periods to get per-period withholding
Step 5: Add to normal PAYG withholding before remitting to ATO

What Changed From 2024-25 to 2025-26

Two changes matter for employers. First, the minimum repayment threshold dropped from $54,435 compared to the previous year's figure — meaning workers who were previously below the threshold may now be above it. If you have employees who previously declared a study debt but were earning below the old threshold, you need to re-check whether their current salary now crosses the 2025-26 floor and triggers withholding.

Second, the ATO adjusted the repayment rate schedule across multiple bands. The changes are not dramatic in percentage terms, but they do shift withholding amounts at common income levels. An employee earning $80,000, for instance, moves from one rate band to another compared with 2024-25, which changes the per-period extra withholding by a small but compliance-relevant amount. If your payroll tables have not been updated, you are running on stale numbers.

The 1 June 2025 CPI indexation also increased outstanding HELP balances — but that does not change your withholding obligation for the pay period. Your job is to withhold the correct per-period amount based on current income; how large the employee's total HELP balance is does not affect the calculation. The balance grows or shrinks based on repayments and indexation on the employee's side, not yours.

Action required now: Pull up your payroll software or spreadsheet and confirm it is using 2025-26 ATO tax tables, not 2024-25. The ATO updated the NAT 1008 tables effective 1 July 2025. Running old tables means wrong withholding amounts on every payslip since that date.

Common Employer Mistakes and How to Avoid Them

The most frequent mistake is not collecting the TFN declaration at all — or collecting it but not recording the study loan status in the payroll system. If an employee verbally tells you they have a HELP debt but never hands you a completed TFN declaration, you have no legal basis for the additional withholding, and you also have no paper trail showing you met your obligations. Always issue a TFN declaration form to every new employee on their first day and keep the completed form for five years.

The second common error is applying withholding only to base salary and forgetting other taxable components. The HELP withholding obligation applies to all assessable employment income — overtime, bonuses, allowances, and commissions all count toward repayment income. If you pay an employee a $5,000 bonus in one pay period, that bonus gets included in the annualised income calculation for that period, which may push them into a higher repayment rate band for that pay run. Most modern payroll software handles this automatically, but manual systems often miss it.

Third: some employers stop withholding once they assume the employee's debt is paid off. You cannot make that assumption. Only the ATO knows when a HELP debt reaches zero. Keep withholding until the employee provides a new Withholding declaration confirming the debt is repaid, or until the ATO notifies you. If you stop early and the debt is still active, the employer can be liable for the shortfall.

Multiple jobs: If your employee has a second job and their combined income triggers HELP repayment, each employer withholds based only on what they pay. The ATO reconciles the total at tax lodgement. You are not responsible for the other employer's payroll.

Avoid these errors:

Always collect a signed TFN declaration — verbal confirmation is not sufficient
Include all taxable income components in the annualised income calculation, not just base salary
Do not stop HELP withholding until the employee provides written confirmation the debt is cleared
Update payroll tables at the start of each income year — ATO publishes new NAT 1008 tables by 1 July
For employees with multiple employers, each employer withholds independently — the ATO reconciles at tax time

Payday Super Is 9 Days Away — What That Means for HELP Compliance Right Now

The Payday Super reforms take effect 1 July 2026 — nine days from now. From that date, employers must pay super at the same time as wages instead of quarterly. This is the most significant change to Australian payroll since Single Touch Payroll, and it directly intersects with HELP withholding compliance. Why? Because Payday Super requires accurate, real-time payroll data flowing to the ATO. If your HELP withholding has been miscalculated, the ATO will see the discrepancy faster than ever before.

The practical advice is to run a compliance audit on every employee record before 1 July 2026. Confirm that every employee with a study debt is correctly flagged, that your software is using 2025-26 ATO tables, and that your super rates are updated to 11.5% (the current Superannuation Guarantee rate). Starting Payday Super with clean payroll data is far easier than correcting months of errors under the new real-time reporting regime.

SAB Account AI was built for exactly this moment. It handles HELP withholding flags, ATO table updates, super rate changes, and STP2 reporting in one platform, purpose-built for Australian small businesses. If you are still running payroll manually or through a system that requires you to remember every threshold change, now is the time to switch — not after the first Payday Super penalty lands.

Deadline: Payday Super starts 1 July 2026. That is 9 days away. Employers who start that regime with incorrect PAYG and HELP withholding data face compounding compliance problems. Fix it this week.

SAB Account AI automatically applies 2025-26 ATO withholding tables and HELP repayment rates to every payslip — start your free trial at sabaccountai.com before Payday Super goes live on 1 July 2026.

SAB Account AI — ATO-compliant invoicing and payslips for Australian small businesses. From $9/mo.

Start free trial

Frequently asked questions

What is the HELP repayment threshold for 2025-26?

The minimum HELP repayment income threshold for 2025-26 is $54,435. Employees earning below this amount have no compulsory repayment obligation for the year, even if they have an outstanding HELP debt.

What is the maximum HELP repayment rate in 2025-26?

The maximum HELP repayment rate is 10%, which applies to repayment income above $159,664. This rate applies to the employee's entire repayment income, not just the amount above the top threshold.

Do employers have to withhold HELP repayments from employee pay?

Yes. Under the Taxation Administration Act 1953, employers must withhold additional PAYG tax for any employee who declares a HELP, VSL, SSL, ABSTUDY SSL, or TSL debt on their Tax File Number declaration. This is a legal obligation, not optional.

How does an employer know if an employee has a HELP debt?

The employee must declare their study debt on their Tax File Number (TFN) declaration or Withholding declaration when they start employment. Employers are not required to verify the debt — the obligation to disclose rests with the employee.

What happens if an employer forgets to withhold the HELP component?

The ATO can recover the under-withheld amount from the employer and may apply penalties. The employer should correct the error by adjusting withholding in future pay periods and contacting the ATO if the shortfall is significant.

Does HELP withholding apply to casual employees?

Yes. The withholding obligation applies to any employee — permanent, part-time, or casual — who declares a study debt, as long as their annualised income is projected to exceed the $54,435 threshold for 2025-26.

What is the difference between HELP, HECS, and VSL for payroll purposes?

HECS was the original name — it is now called HELP (Higher Education Loan Program). VSL covers VET Student Loans. For payroll withholding purposes, the ATO treats all study and training support loans identically using the same repayment rate schedule.

Does HELP withholding affect the employer's superannuation obligation?

No. Super is calculated on ordinary time earnings under the Super Guarantee (Administration) Act 1992 — HELP withholding does not reduce the gross earnings figure used for super calculation. Both obligations run independently.